A drop in hardware costs has sent rooftop solar installation costs plummeting between 6 and 14 percent over the past 18 months, but high soft costs continue to prop up overall install costs.

If you’re thinking of installing solar panels on your roof, there’s no better time than right now: In 2012, the cost of installing a rooftop solar system dropped by as much as 14 percent, and during the first half of 2013, system prices in California fell another 10 to 15 percent.

Those are the top-level findings of the latest Tracking the Sun report [PDF] from the Department of Energy’s Lawrence Berkeley Lab. The sixth annual Tracking the Sun report, published this week, finds that it’s cheaper than ever to install solar in the United States — and that it’s likely to continue to get cheaper.

Between 2008 and 2012, the average price for photovoltaic modules dropped by about $2.60 per watt, which makes up the bulk of the price reductions over that time. Other hardware costs, such as the inverters and mounting materials, have also gotten more affordable, although not as quickly or as steadily as the modules have.

The report highlights two main reasons why prices aren’t even lower: The end of state- and federal-level incentives for solar installations, and the continuing high “soft costs” of solar — notably installation, permitting and inspections — are preventing even more dramatic drops in rooftop solar systems.

Price drops noted in the United States were higher for small PV systems than for larger ones: Systems larger than 100 kilowatts dropped by 6 percent in 2012, systems between 10 and 100 kilowatts dropped by 13 percent, and systems smaller than 10 kilowatts dropped by 14 percent on average.

Particularly telling among the findings of the report is that installation prices for nearly identical systems can be 50 percent higher in different states: For systems under 10 kilowatts in 2012, 20 percent were installed for under $4.50 per watt, 20 percent were installed for more than $6.50 per watt, and the remaining 60 percent fell somewhere in that range.

Although states with more-developed solar markets are often cheaper to install in than less-developed states, the report notes that California — the nation’s largest solar market by far — also features relatively high installation prices. “States with less competition among installers, higher incentives, and/or higher electricity rates for net metering may have higher installed prices,” the report notes, especially “if installers are able to ‘value-price’ their systems (i.e., price their systems based on the value they provide to the customer, rather than based on the cost borne by the installer).”

Also important to note is how much more expensive on the whole solar installations are in the United States than in some of the world’s largest markets for solar power. In Germany, Italy and Australia, prices for small residential systems can be 40 percent lower than in the U.S. Much of this difference again comes to lower soft costs overseas.

Falling solar prices is of course welcome news, although the issue of soft costs remains troubling. Fortunately, recent weeks have brought encouraging signs from California and New York highlighting efforts in both states to speed solar permitting and thereby lower some of those soft costs.

Although the full Tracking the Sun report is highly technical and wonky, you can download the PDF from Lawrence Berkeley Lab.

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